By Mahmoud Gamal
Mubasher: Stock markets in the GCC region and Egypt saw a rebound in banking stocks on Thursday, following the U.S. Federal Reserve decision.
The Federal Reserve voted unanimously on Wednesday to raise interest rates by a quarter point, marking the first increase in more than nine years.
The bank raised its fed funds rate to a range of 0.25% to 0.5%, ending an unprecedented seven-year run of near-zero interest rates. The board also raised the discount rate to 1% from 0.75%.
This was followed by decisions by central banks in Saudi Arabia, Kuwait, Bahrain and UAE to raise their respective interest rates.
The decision of central banks lure local traders to bank stocks as the banking sector is the biggest gainer from the U.S. Fed move, according to analysts.
The continued pressures from speculators amid expectations of the rate hikes paved the way for leading stocks to rally today, they added.
At 2:00pm, Tadawul’s banks sector rose by 4.4% or 666.9 points to reach 15,720.6 points, after Alinma Bank and Al Rajhi climbed by 6.9% and 6.4% respectively.
The region’s banks, especially those operating according to Sharia, will likely benefit most from the Fed decision, said Mohamed Al Shamemri, financial analyst. He added that Saudi Arabia’s decision to repo positively impacted shares on Tadawul.
Saudi Arabian Monetary Agency (SAMA), the kingdom's central bank, has raised its benchmark reverse repurchase rate (repo) on Wednesday by 25 basis points to 50 basis points, the state's news agency reported.
The central bank left the repo rate unchanged, with the decision taking effect immediately, in light of developments in local and international financial markets.
The Federal Reserve hiked interest rate for the first time in nine years on Wednesday, which indicates that the U.S. economy overcame the wounds of 2007-2009 financial crisis.
The banking sector at the Egyptian Exchange rose by 3.3% or 96.4 points at 2:05 pm to 2,981.73 points, after CIB – the market’s heaviest weight – rallied by 3.8% thus pushing the benchmark index higher by 2.7% to 6,665.80 points.
Likewise, banks sector at Abu Dhabi Securities Exchange jumped by 2.9% or 201.16 points to 7,145.53 points, as FGB, Bank of Sharjah and ADCB rose by 4.7%, 2.8% and 2.7% respectively.
Dubai Financial Market’s (DFM) banks sector rose by 2.56% or 53.6 points to 2,153.65 points, after Ajman Bank and DIB rallied by 7.3% and 4.6% in a row. The market ended 2.9% higher.
The UAE Central Bank said that it decided to raise the interest rate on its certificates of deposits (CDs) by 25% basis points to be effective immediately, according to a statement on Thursday.
Qatar Stock Exchange’s (QSE) banks sector advanced by 0.92% to 2,681.87 points after Islamic Holding jumped by 3.15%.
Kuwait and Oman bourses slipped on Thursday, while their banks sectors rose by 0.18% and 0.13% in a row.
Translated by Sayed Abdel Rahman
